Foreign citizens and Turkish citizens residing abroad, and foreign entities established in accordance with their regulations and international companies who invest in Turkey are considered as foreign investors.
With the requirement to make the required declarations in accordance with the current regulations (legislation), foreign investors can invest in Turkey by establishing legal entities or offices or purchasing shares of an existing entity (either outside of stock exchange or from stock exchange with minimum 10% stocks or equivalent voting right).
What can be invested as capital?
The followings that brought from abroad:
The following or similar economical valuables acquired domestically:
Key Facts (Essentials) Regarding Foreign Investors
Establishment of Corporations and Branches
The Taxation of Corporation and Branch Earnings
The net income/profit of corporations and branches made in Turkey are subject to 20% corporate tax. The profit made in the current year is declared quarterly and is subject to 20% Advance Payment Tax; and the amounts paid throughout the year (4 times) are deducted from the final amount of tax obligation, calculated on the annual profit.
If the profit is distributed to shareholders these dividends are subject to withholding tax of 15%. Such withholding tax is not paid if the profit is not distributed but kept as earnings or added to the capital.
Also if the branch’s profit is not transferred to the headquarter then it is subject to 20% corporate tax; if and when transferred, 15% income tax is withheld on the amount that is transferred.
Can Liaison Offices Be Established in Turkey?
Establishment of liaison offices of corporations established in accordance with their country’s regulations are subject to the permission of The Treasury ( Undersecretary of Treasury ) with the condition of not performing any commercial activities.
Liaison offices are permitted to operate for a period of maximum 3 years; however this period can be extended for another period of maximum 3 years considering their prior year operations and future plans and targets.
The salaries of personnel employed at the liaison offices are exempt from income tax as long as they are transferred from abroad and paid in foreign currency.
The Status of Turkish and Foreign Personnel to be Employed
Foreign personnel that will be employed at a foreign investment or a liaison office needs to get permission from the related ministry. Work permit is given for a certain period of time and can be extended at the end of the period.
Foreigners who legally reside in Turkey continuously for a period of at least eight years or the ones who legally work for a period of six years can be qualified for an indefinite work permit.
Turkish and foreign personnel to be employed at a foreign capital corporation established in Turkey are taxed in the same way. Employers are required to withhold the income tax when they pay the salaries or other benefits considered as salary either in cash or in kind.
Income tax withheld from salaries is gradually increasing scaled, ranging between 15% and 35%.
The foreigners that work in Turkey as employees of a company, except for those that are employed by corporations abroad and are sent to Turkey for a certain job and declare that are already insured, are considered to be insured and all types of social insurance (work accidents, occupational illness, illness, maternity, disability, old age and death) are applied.
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